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Showing posts from October, 2008

Today's VIX

You can add the VIX to list of things that have profited in this declining market. An index that few knew much about, is now an important market indicator. It's so important that many investors claim that's it's just as significant as the Dow Industrial Average. Dan Deming has been on TV and in newspapers explaining not only this point, but using his expert analysis of the VIX in explaining investor sentiment. Here are some excellent links caputuring his opinions.
1. www.cnbc.com/id/15840232?video=849219817
2.http://www.cboe.com/TradTool/webcast.aspx?channel=885&movieid=42513
3. http://www.suntimes.com/business/1237013,CST-FIN-vix23.article
4.http://www.jsonline.com/story/index.aspx?id=805405
5. http://www.cboe.com/TradTool/webcast.aspx?channel=885&movieid=42417
6. http://www.cboe.com/TradTool/webcast.aspx?channel=885&movieid=42233

Investor Advice

Dear Friends:

I would like to add some thoughts to the conversations we have had over the last weeks about the wild markets.


1. If you were to ask me for my personal opinion this is it: I don't know if Friday was the bottom but there is a good chance it was and I think the market could go back to 10,000 in a flash. Take a look at JNJ below, which is typical of the blue chips classic charting bottom during Friday's whipsaw. These kinds of bargains will not last for long, and once we have bottomed these falsely low prices will be replaced by a strong recovery.





2. For me, the idea that we would go into a steep economic decline is just not valid. As a student of economics what I have witnessed is a classic market panic, a once in generation kind of thing and something that tends to come back quickly once confidence is restored. Panics do have roots in real things; here the de-leveraging of banks bloated and risky balance sheets, but for me, their losses are just the retaking of their…

Where's the bottom?

Brian Stutland was interviewed by the Chicago Tribune to get his take on what was happening in last week's declining markets. When asked about where the market was headed last week his predictions were fairly accurate, "I'm expecting another 5 or 10 percent down before it's all over," said Chicago trader Brian Stutland, president of Stutland Equities LLC. "We may be nearing a bottom, but it was definitely real panic selling [Thursday]." Here's the whole article

http://www.chicagotribune.com/business/chi-fri-crisis-calm-fearoct10,0,7305861.story

Big Rally, Dow reaches 9,000 as VIX retreats

Reacting to one of the worst weeks on Wall St, the Dow rebounded over 900 points to close at 9,387 on Monday. Coming off record highs over 75, the VIX finally came back down to earth closing just under 55 down 21%. The big rally's impetus early Monday morning as markets worldwide reacted positively to European government's interventions into the banking system, pouring billions worth of capitol into world banks. Echoing this tactic, Treasure Secretary Paulson is rumored to do something similar tomorrow. Dow futures are already reacting positively to the news up 192 points in early trading. The question remains however, with the economy still in turmoil, how long will this rally last?

Dow under 10,000

For the first time since 2004, the Dow Industrial Average hit below 10,000 this morning. News around the world was not much better as the sum of all fears of a downward spiral in the credit crunch has spread globally. In Europe early Monday morning, banks continue to decline especially in Russia. Sberbank, Russia's biggest bank, dropped as much as 22 percent. In South America, the Brazilian Stock Market hit a down limit shut off of 10%. In Us markets, many investors are worried not only over Friday's bailout plan specifically that it came a little too late, but also have a lack of trust in the economy. This fear was marked by the VIX level which was up 23% at 55.64 in mid morning trading. We have not seen these unprecedented numbers in the VIX since 1989. Historically, when the VIX has hit a level this high, it has marked a bottom such as in the 1989 level. However, many are speculating whether or not this is the case in this unpredictable market.

The Vix...."This one goes to 11"

CNBC's Erin Burnett interviewed Dan Deming this morning as they discussed the rising levels of the VIX. Dan referenced the movie Spinal Tap as he compared the VIX going to 11. Also on topic was the House of Representatives bail out vote on Capital Hill. Dan explained that the passage of the bill is not only imperative today, but it has to be passed quickly. Here's the link.